(Dis)stressed investor

Housing Prices Projected to Fall Through End of Decade

What discount rate/cost of capital did you apply? It's been a while, but I don't think you're interpreting the futures prices correctly, double check by someone who trades futures would be appreciated.

If you believe that the index a year from now should be $104.50, the future would trade at $100 today (to account for the opportunity cost of capital, here just using the 4.5% fed funds rate).

So you need to inflate TODAYs price for the future by the remaining duration. San Fran is the worst market, shown as -26% by your analysis. The Nov-11 future is trading at 154.60 now, so the current market expectation is that the future is will trade at $154.6 * (1.045^3) = $176.4, -15% (not -26%).

Still negative in most cases, but not as bad as you portray. Of course even a flat market is below the everyman's expectations.